A-I to buy 28 new aircraft for Rs 100 billion

The Air-India board on Saturday gave its nod to acquire 28 new aircraft as part of fleet expansion and the acquisition at a cost of about Rs 10,000 crore (Rs 100 billion).

As per the plan, approved by the board, chaired by K Roy Paul, Air-India chairman and civil aviation secretary, the airline will acquire 10 long range and 18 short range aircraft.

This was stated by A-I's director public relations Jeetendra Bhargava after the meeting in New Delhi.

The long-range aircraft are Airbus 340, while the 18 others are Boeing 737-800, he said.

The new craft would be powered by CFM engines, he added.

The corporation would send its fleet acquisition plan, approved after consideration of the report of the in-house techno-economic negotiating committee headed by its director operations Capt N K Hathi by the full board, to ministry of civil aviation.

The new aircraft would be acquired over a period of five years and will replace the 14 existing ones that the corporation has taken on dry lease.

These include eleven Airbus 310 and three Boeing 747-200.

The board also decided to extend its ongoing voluntary retirement scheme from non-operational staffers to those in operational areas (including pilots and engineers), Bhargava, who also holds the charge of HRD, said.

A-I has a total strength of 15,650 employees, including about 6,000 in the operational area, and the existing VRS has been accepted by 250 staffers since February 2003.

The Air-India board has also set up a committee to look into the possibilities of starting a low-cost carrier, Bhargava said.

"We are looking at a low-cost carrier at greater detail for which, a committee has been set up today," he said, but declined to give details.

The country's flagship carrier had planned to operate a low-cost carrier this year from Kochi as Air-India Charters Ltd but it was put off due to opposition from the employees' union.

The Rs 10,000 crore fleet acquisition project cost involves the purchase of technical infrastructure like training stimulators as well as training of pilots, Bhargava said.

At present, the country's flagship carrier has a fleet of 33 aircraft.

These are 19 Airbus 310, nine Boeing 747-400 including three on dry lease, two Boeing 747-300 and three Boeing 747-200.

"The workforce strength of 15,650 people is Air-India's lowest in 22 years, while the fleet size is the highest-ever in its history," Bhargava said.

The fleet acquisition plan would be 85 per cent funded through financing from the EXIM Bank of US in the case of Boeing and European Credit Agency for the Airbus aircraft.

The remaining 15 per cent of the funding would be made through a commercial loan, Bhargava said, adding that the acquisition process would start as soon as the government gives the nod.

Roy Paul said the Air-India deal, its biggest-ever, may be handled separately from the IA deal as the latter has already reached the Public Investment Board stage while the A-I plan has just been approved.

Like the IA plan, the A-I deal would now be forwarded to the Pre-PIB and then it would move to the PIB before being placed before the Cabinet for final approval.

"We found that it was not feasible to acquire 17 long-range aircraft in terms of streamlining and efficiency of operations as of today," Roy Paul said when asked why the earlier plan to acquire 17 medium capacity long range aircraft has been cut to 10 aircraft.

The much-awaited approval from Air-India ensures a major win for Airbus Industries whose 43 aircraft worth about Rs 10,000 crore have been selected by the Indian Airlines board in March last year, according to industry analysts.